SolarCity Has More Than 250,000 Customers, Reports Record Bookings, Installs

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

SolarCity has started to describe itself as two types of operations under one roof -- a development company and a power company. The development company sells and installs solar and energy storage. The power company provides financing and harvests 30 years' worth of energy production and asset yield. (Similarly, SolarCity Chairman and Tesla CEO Elon Musk recently said that there are two Teslas, the car company and the energy company.)

In Q2 2015, SolarCity (the development company) booked 395 megawatts and installed 189 megawatts, beating guidance. (In Q1 2015, SolarCity booked 237 megawatts and installed 153 megawatts.) SolarCity (the power company) has produced over 1.25 terawatt-hours of energy over the last 12 months and recently hit the 6.5-gigawatt-hour-day mark.

Metrics and milestonesPowerCo

Available cash: $114 million, of which a record $41 million was generated in Q2. According to its investor letter, SolarCity believes that "available cash" is a clearer representation of "true business performance and represents the net levered cash flow to equity of PowerCo." The letter continues, "PowerCo serves as our proxy for the steady-state operations and cash flow of our business assuming no further growth or development of new contracts and installations. We view this as one of our key metrics of performance and value creation, and we will be reporting this metric on a quarterly basis going forward."

Energy production: 1.25 terawatt-hour

Cumulative megawatts installed: 1,418 megawatts at the end of Q2 2015 -- up 86 percent year-over-year

Cumulative customers: In Q2 2015, added 44,900 customers for a cumulative total of 262,495 at the end of Q2 2015 -- up 86 percent year-over-year

DevCo

Cost: $2.91 per watt, down 3 percent "despite flattish panel prices"

Installed a record 189 megawatts

Residential installations totaled 168 megawatts

California grew 97 percent year-over-year

Guidance

SolarCity expects to install a record 260 megawatts of solar energy systems in the third quarter and 920 to 1,000 megawatts for the full 2015 fiscal year. Rive said he is confident that SolarCity growth in 2016 will be in line with industry growth.

Policy review and outlook

SolarCity lauded the California PUC’s decision on utility residential rate reform for "normalizing energy pricing across ratepayers and denying utilities’ request for a significant fixed charge in favor of a higher minimum bill."

SolarCity referred to a "victory in Arizona by defeating an attempt to tax leased distributed generation systems like utility-scale systems."

SolarCity will offer a private placement of $123.5 million aggregate principal amount of asset-backed securities, series 2015-1

A few tidbits from last quarter's call

COO Tanguy Serra said that to achieve the goal of 1 million customers by 2018, the company must grow 60 percent per year

SolarCity hired 1,300 employees in Q1 2015

Serra noted that a recent 157-kilowatt commercial rooftop install took 3 days due to the use of the Zep mounting hardware, claiming other installers would take weeks to perform the same job.

And a bit on energy storage

Jeff St. John has reported on the ways SolarCity or Tesla might make money with new energy storage products. But despite the chatter about rate cases, time-of-day usage, and 50-50 revenue splits, the SolarCity folks are still waiting for the right rate case and for market structures to resolve. For now, the application is backup power.